Congress and the White House could deliver by March 1 an economic rescue package meant to stave off a full-blown recession, a senior Democratic lawmaker said Sunday.
Sen. Charles E. Schumer (D-N.Y.), chairman of the Joint Economic Committee, said Democrats and the administration agreed the stimulus package should include tax relief for middle-income families. He also indicated that the final plan could include business tax cuts and spending incentives for the unemployed.
Washington is gripped with a bipartisan sense of urgency, Schumer said. "I think both sides of Pennsylvania Avenue, both parties, realize our economy is headed south in a significant way and we need relief," he told "Fox News Sunday."
President Bush on Friday proposed a set of measures, including temporary tax cuts, meant to jump-start the economy. Republicans and Democrats will now have to work out the contours of that rescue package, overcoming some differences as they do so.
Some economists believe the U.S. has already entered a mild recession. They cite the effects of careless lending in the housing market, the climbing price of oil and choppy financial markets.
Lawmakers want their stimulus package to have a domino effect. By putting cash into American wallets, they hope to trigger spending and job creation that moves through the economy like a wave.
Rep. Charles B. Rangel (D-N.Y.), chairman of the committee that will write the tax relief bill, said it was crucial to move quickly. "It has to be timely," Rangel said on ABC's "This Week." "We have to get it out there in order for it to have any positive impact."
But there is no agreement yet on just who should get tax relief. That question is crucial because lawmakers want to get the money to those who will spend it, pumping it right back into the economy.
Republicans have indicated that they would like to limit the tax rebates to those who pay income tax. Treasury Secretary Henry M. Paulson has said that the president "is focused on broad-based tax relief for those who are paying taxes," and that such an approach was successful in 2001 and 2003.
Democrats say that working families who don't earn enough to pay income tax should be included. Economists have estimated that about 22 million households file returns but do not earn enough to pay tax. It is estimated that another 22 million households, including elderly people on fixed incomes, do not file.
Schumer pointed out that the working families who don't pay income taxes still pay payroll taxes, and that they are more likely to need the money and therefore spend it.
"Every economist up and down the line will tell you that the person making $35,000 will spend the money more quickly because he or she needs to, whereas the person making $200,000 may delay doing anything with that money for a while," Schumer said.
Rangel, chairman of the House Ways and Means Committee, said he also believed that relief should be extended to those who do not earn enough to pay taxes and to the unemployed.
"You can bet your life that there will be an increase in the amounts of monies that will be given for unemployment compensation," Rangel said, adding that the stimulus package would include increased funding for food stamps.
Despite uncertainty about how the rescue package would be structured, both Democrats emphasized that there was a strong sense that Congress and the administration would have to work together.
"Partisan fights and dithering could only make whatever recession we're going to have worse," Schumer said. "There's a real spirit of compromise in Washington right now."
He cited the president's agreement not to raise the issue of permanent tax cuts, a GOP priority, as a sign of good intent. "They would have created a brouhaha that would have made it very difficult to pass," he said.
Rangel said he expected Democrats to make concessions as well. "Sure, we have Democrats that want more and Republicans who want to make certain that businesses are happy," he said. "But at the end of the day, I can assure you that the American people will not be disappointed, and there will be a bipartisan package ready."
"I have never seen this type of solidarity," Rangel added.Copyright © 2014, Los Angeles Times